Question
Why is freight-out never included in inventory?
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Answer
It is a selling expense.
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Question
What makes inventory a balance-sheet and income-statement issue at the same time?
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Answer
Ending inventory and COGS are complements.
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Question
Why does an overstatement of ending inventory also overstate income?
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Answer
Higher ending inventory means lower COGS.
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Question
What controls inventory ownership at the balance-sheet date: possession or legal title?
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Answer
Legal title controls.
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